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Trine Professor Worries Recession May Already Be Hitting U.S. Economy
Wednesday, September 25, 2019


Marek Kolar, Ph.D., associate professor in Trine University's Ketner School of Business, says the U.S. economy is heading toward, and maybe already is, in a recession, one that could possibly be worse than 2008.

Dr. Kolar says, "The Fed recently reversed its policy of normalizing the interest rate, and proceeded to lower its federal funds rate target at its last two meetings in September and July. In its statement, the Fed pointed to weakening business fixed investments and exports, suggesting the economy is slowing down."

Kolar later goes on to point out that, "Even though the Fed claims the inflation rate is below its 2% target (according to its preferred personal consumption expenditure index), the core CPI has increased 2.4% year-over-year in August 2019, and the annualized growth rate of the U.S. money supply, regardless of whether measured by M1, M2, or MZM, has picked up from close to 3% a year ago to over 5% as of September 9."

Finally Kolar states, "As a recession seems to be unavoidable, in my opinion the Fed should focus on its stable prices mandate and keep the inflation rate from rising above its 2% target, even if it means letting the economy go through a period of a severe recession. A period of recession would lead to curing some of the underlying imbalances, such as high levels of household and corporate debt, excess of imports over exports, and interest rates well below historical levels. As a result, the economy may be able to start growing again consistently at rates close to 3% or above.

Dr. Kolar holds a Bachelor of Business Administration from Northwood University, a Master of Arts in Applied Economics from Western Michigan University and a Ph.D. in Macroeconomics from Michigan State.



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